Many Couples Do Not Coordinate 401(k) Matches

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Imagine a married couple. Both work, and their earnings are identical. But one spouse’s employer is matching every dollar of her 401(k) contributions up to a cap. The other spouse’s 401(k) match is only 50 percent.

They could increase how much they are saving for retirement by contributing first to the 401(k) with the full match in this simple version of the myriad situations married couples face. But, according to a new study, one in four couples do not prioritize the more generous employer’s 401(k) matching funds.

This lack of coordination may have a cost: the average couple who leaves match money on the table could give up nearly $700 in a year. That may not sound like a lot but the researchers estimate it is 13 percent of the average annual contributions. And if a couple does not reallocate their contributions, years of foregone matches, along with the potential loss of investment income, could add up.

“These couples could increase their retirement wealth without [reducing] their consumption by simply reallocating” their contributions, the M.I.T., Yale, and Treasury Department researchers said.

They also found that even when the stakes are high and a couple’s allocation decision resulted in $5,000 in lost matches, a significant minority of couples did not coordinate.

The longer the people in this study were married, the more likely they were to coordinate their matches. “The strength of marital commitment is associated with optimizing retirement contributions,” the researchers said. Not surprisingly, financial coordination by divorcing couples declined soon after they split up.

Their analysis was based on a massive IRS database of 44 million taxpayers and federal data on some 6,200 401(k) and 403(b) savings plans. The focus was on couples filing joint tax returns, and both were fully vested in their respective savings plans. To get the workers’ match rates, the researchers mined the publicly available information employers are required to file with the federal government about their tax-exempt savings plans.

It’s arguably more important for couples to save something – about half of U.S. private sector workers don’t participate in a retirement plan at work at any given time – than that they maximize their respective employers’ matches.

Nevertheless, the cost “can be substantial” if couples do not prioritize the 401(k) with the more generous match, the researchers concluded.

To read this study by Taha Choukhmane, Lucas Goodman at Treasury and Cormac O’Dea, see “Efficiency in Household Decision Making: Evidence from the Retirement Savings of U.S. Couples.”

The research reported herein was derived in whole or in part from research activities performed pursuant to a grant from the U.S. Social Security Administration (SSA) funded as part of the Retirement and Disability Research Consortium.  The opinions and conclusions expressed are solely those of the authors and do not represent the opinions or policy of SSA, any agency of the federal government, or Boston College.  Neither the United States Government nor any agency thereof, nor any of their employees, make any warranty, express or implied, or assumes any legal liability or responsibility for the accuracy, completeness, or usefulness of the contents of this report.  Reference herein to any specific commercial product, process or service by trade name, trademark, manufacturer, or otherwise does not necessarily constitute or imply endorsement, recommendation or favoring by the United States Government or any agency thereof.


This research wasn’t asking the bigger question. Do spouses pool income, or do they eat what they kill, or something in between? Prioritizing the more generous match may not make sense for non income poolers.

Don Caribé

Too many couples live like they are roommates. They split everything from dinners to electric bills to the mortgage. No wonder they do not coordinate 401K matches.

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